10 Thinking that forex traders must not keep in their minds
- Thinking that they can control the market
- Using indicators are 100% safe
- Following market prediction without analyzing
- Doubling their lots to replace their loss
- Stop learning and analyzing when already get some profits
- Hold a loss position in order to wait the price back
- Underestimate writing daily journal
- Opening new position without plan
- They will never lose
- Brokers can't lose
Thought the forum might enjoy this quote - copied from Van Tharp Sep 28th Letter
"Winners Simply Do What Losers Won’t Do
Adopting the belief that “winners” simply do what the “losers” will not do is very useful in many aspects of life. After all, that is the case in the field of investing and trading. So let’s step into that belief and see what naturally follows.
Here are some winner/loser opposites. If you find yourself disturbed by any of these, you may have stumbled across a clue to an area in which you need to spend some time. Use all the tools you have learned from the Peak Performance Course to investigate ways to step beyond and overcome your limitation.
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1) A winner crafts a detailed business plan which includes on-going reviews and sticks to the plan.
A loser thinks a business plan is something he’ll get to one day in the future after he has achieved some success trading.
2) A winner designs systems with high positive expectancy, sound money management strategies, minimal degrees of freedom to avoid curve fitting, and then puts the system into his business plan for implementation. He lets the market determine the outcome.
A loser has a continually changing system/methodology based on whether or not the last few trades were winners or losers. He is scared of what "may happen to him" in the markets in the future. His position size is controlled by whims and notions. His exit points vary depending on how fearful he is of giving up open profits or how hopeful he is that a losing trade will turn around.
3) A winner knows that his method will provide the long term return he is after if he implements it correctly. A loser thinks he has to continually be looking for a new indicator to eliminate having to enter trades that lose money. A winner knows deep in his heart that he is completely responsible for the outcome of each and every trade.
A loser assumes responsibility for winning trades while blaming floor brokers, brokerage firms, hedge funds, international news events, or simply "the market" for losing trades.
4) A winner is not trying to prove anything about himself through his trading activities.
A loser thinks he’s the master of the market, closing a big winning trade,and then gloats in his outstanding success he had "beating" the market.
5) A winner knows he’s a winner even after an expected 12 losses in a row.
A loser is sure he’s almost worthless as a person after 5 losses in a row.
6) A winner realizes that he produces the emotions he experiences related to trading and assumes responsibility to resolve deep-seated root causes for negative emotions that interfere with his trading business.
A loser knows that it’s the market that causes him to feel depressed or angry, and he’s determined to fight this beast.
7) A winner gladly shares trading advice to less experienced people.
A loser thinks that he needs to look cool as a suave trader and talk down to those less experienced than him.
8) A winner is aware that his methods and systems may require modification as time proceeds, and he develops appropriate boundaries of performance which will indicate whether or not he needs to review his system.
A loser is sure that all he has to do is find "the right system or method" and then he will forever more be able to sit back and enjoy easy profits. He feels slighted by professional traders since they claim not to have any great secret indicators, and he "knows" they’re lying to him.
9) A winner understands the level of capitalization required to successfully implement his trading business plan.
A loser thinks that his $5,000 account is a great start for trading highly leveraged commodities, and the day he opens the account he feels like he’s really off to the races now.
10) A winner knows that it is up to him to develop the skills necessary to create, test and evaluate sound trading systems and methods.
A loser knows he just hasn’t looked hard enough to find that special system someone has created which will bring him all the wealth he’s ever dreamed of ("damn those professional traders - if only they would tell me their secret indicators").
11) A winner looks forward to opportunities to give back to the world some of what he has learned along the way to becoming a successful professional trader.
A loser knows he has to keep everything he learns secret since if anyone finds out where he places his one lot stop orders, then they will try to run the market to his stops to hurt him.
12) A winner who goes long on an upside break-out only to be stopped out at the bottom of the correction of the failed break-out four days later can simply reenter on another upside break-out a few days later.
A loser in the same trade gets mad that the market retraced all the way to his stop and then reversed. As prices rally back through to a second break-out he gets even madder since he’s not in the trade he tried to take. Two months later after a tremendous rally, the loser is so angry at the market for what "it’s done to him" that he finally buys (just days from the top of the move).
13) A winner runs his trading business wisely—carefully managing his fixed and variable costs of doing business and making capital investments which provide a worthwhile return to his business.
A loser spends all the money he can afford to buy the latest computer hardware and the hottest (best marketed) trading software he can find—with no understanding of the return expected from his investments.
14) A winner knows he needs to continually work on his feelings and emotions related to his trading business as he grows in success and equity.
A loser knows that he only needs to buy additional software and systems and perhaps attend the "latest guru’s" trading method to achieve what he’s after.
15) A winner knows what his goals are and he has criteria established to measure his level of achievement.
A loser’s goal is "being rich", and he’s sure that it’s only a matter of finding the "right" answer for how to trade.
By Abe Cofnas
Without a doubt, trading is more than a few quick tips for success. You need experience, fortitude, capital and, above all, a solid trading system. However, for beginners and those who are perhaps losing their focus amid significant drawdowns, keeping things simple can introduce much-needed focus into your trading.
To that end, here are 10 tips for trading e-forex that can help you get a handle on these exciting markets.
1. For small accounts especially ($25,000 and under), trade with the trend. Many beginners look for trades in any direction. While forex trading easily permits bi-directional trading, trading in the direction of the trend improves your odds over the long run.
2. Have two accounts. One real account and the other a demo account. Learning doesn't stop when trading real dollars begins. Keep the demo account and use it to test alternative trades, alternative stops, etc. For example, you can shadow your real trades with identical ones in your demo account, but widen your stops in the demo in an effort to see if you're being too conservative.
3. Stop looking for leading indicators. There aren't any. While some firms make a lot of money selling software that predicts the future, the reality is that if those products really worked, they wouldn't be giving the secret away.
4. Examine daily charts, four-hour charts and one-hour charts to time your trades. While trading at 30- and 15-minute time increments is doable, it takes a great deal of dexterity.
5. Don't trade the time frame. Trade the pattern. Reversal patterns, hesitation patterns and breakout patterns appear often. Learn to look for the pattern in any time frame.
6. If you're properly funded, trading two lots is safer than trading one. Trading three lots is safer than two. Trading is a synthesis of emotions, technical analysis and money management. One lot makes it difficult to weigh these elements in deciding to enter or exit. Two lots is easier and, providing you have the capital, three lots is optimal.
7. Extreme trading can be the most conservative trading. Trading at the extremes when prices touch or break or bounce off trend, support or resistance lines increases the odds that you have chosen the correct direction.
8. Scan the Big Five - the dollar/yen, euro/dollar, Swiss franc/dollar, euro/yen and pound/dollar before you decide to take a position in any one of them. There might be something obvious you're missing.
9. Follow the Upside Down Rule. If you can turn a chart upside down and it looks the same, stay away.
10. Don't count profits in your first 20 trades. Keep track of the percentage of wins. Once you know you can pick direction, profits can be increased with multi-plot trading and variations in using your stops. In other words, now is the time to get serious about money management.
1. We accumulate trading information - buying books, going to seminars and researching.
2. We begin to trade with our 'new' knowledge.
3. We consistently 'donate' and then realize we may need more knowledge or information.
4. We accumulate more information.
5. We switch the currencies and time frames we are currently following.
6. We go back into the market and trade with our 'updated' knowledge.
7. We get 'beat up' again and begin to lose some of our confidence. Fear starts setting in.
8. We start to listen to 'outside news' & other traders.
9. We go back into the market and continue to donate.
10. We switch currencies and time frames again.
11. We search for more trading information.
12. We go back into the market and continue to donate.
13. We get 'overconfident' & market humbles us.
14. We start to understand that trading success is going to take more time and more knowledge then we anticipated.
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Many Traders Will Give Up At This Point As They Realize That Forex Is Not As Easy As It Looked And That Hard Work and Study Will Be Required
But Some Do Not Give Up ...
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15. We get serious and start concentrating on learning a real methodology.
16. We trade our methodology with some success, but realize that something is missing.
17. We begin to understand the need for having rules to apply our methodology.
18. We take a sabbatical from trading to develop and research our trading rules.
19. We start trading again, this time with rules and find some success, but overall we still hesitate when it comes time to execute.
20. We add, subtract and modify rules as we see a need to be more proficient with our rules.
21. We go back into the market and continue to donate.
22. We start to take responsibility for our trading results as we understand that our success is in us, not the trade methodology.
23. We continue to trade and become more proficient with our methodology and our rules.
24. As we trade we still have a tendency to violate our rules and our results are erratic.
25. We know we are close.
26. We go back and research our rules.
27. We build the confidence in our rules and go back into the market and trade.
28. Our trading results are getting better, but we are still hesitating in executing our rules.
29. We now see the importance of following our rules as we see the results of our trades when we don't follow them.
30. We begin to see that our lack of success is within us (a lack of discipline in following the rules because of some kind of fear) and we begin to work on knowing ourselves better.
31. We continue to trade and the market teaches us more and more about ourselves.
32. We master our methodology and trading rules.
33. We begin to consistently make money.
34. We get a little overconfident and the market humbles us.
35. We continue to learn our lessons.
36. We stop thinking and allow our rules to trade for us (trading becomes boring, but successful) and our trading account continues to grow as we increase our position size.
37. We are making more money then we ever dreamed to be possible.
38. We go on with our lives and accomplish many of the goals we had always dreamed of.
Level #5. Unconscious Competence
Now were cooking - just like driving a car, every day you get in your seat and trade - you do everything now on an unconscious level.
you are running on autopilot. You start to pick the really big trades and getting 100 pips in a day is becoming quite normal to you.
This is trading utopia - you have mastered your emotions and you are now a trader with a rapidly growing account.
you're a star in the trading chat room and people listen to what you say. you recognise yourself in their questions from about two years ago.
you pass on your advice but you know most of it is futile cos they're teenagers - some of them will get to where you are - some will do it fast and others will be slower - literally dozens and dozens will never get past stage two but a few will.
Trading is no longer exciting - in fact it's probably boring you to bits - like everything in life when you get good at it or do it for your job - it gets boring - you're doing your job and that's that.
You can now say with your head held high "I'm a currency trader"
I hope you've enjoyed this text and can recognise yourself in some stage or another - personally I'm at stage four now and am constantly making good amounts of pips - I've been trading in total for about 3 years and the first two were hell on earth.
for those of you reading this who stick with it, ill look forward to the banter we have together in the future when we are both bored to death during the trading day
Ok, now you are making trades whenever your system tells you to.
you take losses just as easily as you take wins
you now let your winners run to their conclusion fully accepting the risk and knowing that your system makes more money than it loses and when you're on a loser you close it swiftly with little pain to your account
You are now at a point where you break even most of the time - day in day out, you will have weeks where you make 100 pips and weeks where you lose 100 pips - generally you are breaking even and not losing money.
you are now conscious of the fact that you are making calls that are generally good and you are getting respect from other traders as you chat the day away.
You still have to work at it and think about your trades but as this continues you begin to make more money than you lose consistently.
you'll start the day on a 20 pip win, take a 35 pip loss and have no feelings that you've given those pips back because you know that it will come back again.
you will now begin to make consistent pips week in and week out 25 pips one week, 50 the next and so on.
this lasts about 6 months
then comes level Five
Level #3. The EUREKA Moment
you realise that its actually possible to make money with a simple moving average and nothing else IF you can get your head and money management right
You start to read books on the psychology of trading and identify with the characters portrayed in those books.
Finally comes the eureka moment.
The eureka moment causes a new connection to be made in your brain.
you suddenly realise that neither you, nor anyone else can accurately predict what the market will do in the next ten seconds, never mind the next 20 mins.
You start to work just one system that you mould to your own way of trading, you're starting to get happy and you define your risk threshold.
You start to take every trade that your 'edge' shows has a good probability of winning with.
when the trade turns bad you don't get angry or even because you know in your head that as you couldn't possibly predict it it isn't your fault - as soon as you realise that the trade is bad you close it . The next trade will have higher odds of success cos you know your simple system works.
You have realised in an instant that the trading game is about one thing - consistency of your 'edge' and your discipline to take all the trades no matter what.
You learn about proper money management and leverage - risk of account etc etc - and this time it actually soaks in and you think back to those who advised the same thing a year ago with a smile
you weren't ready then, but you are now.
The eureka moment came the moment that you truly accepted that you cannot predict the market.
Then comes level four
Level #2. Conscious Incompetence
Level two is where you realise that there is more work involved in this and that you might actually have to work a few things out.
you consciously realise that you are an incompetent trader - you don't have the skills or the insight to turn a regular profit.
During this phase you will buy systems and e-books galore, read websites based everywhere from Russia to the Ukraine. and begin your search for the holy grail.
During this time you will be a system whore - you will flick from method to method day by day and week by week never sticking with one long enough to actually see if it does work. every time you came upon a new indicator you'll be ecstatic that this is the one that will make all the difference.
you will test out automated systems on Meta-trader, you'll play with moving averages, Fibonacci lines, support & resistance, Pivots, Fractals, Divergence, DMI, ADX, and a hundred other things all in the vein hope that your 'magic system' starts today.
you'll be a top and bottom picker, trying to find the exact point of reversal with your indicators and you'll find yourself chasing losing trades and even adding to them cos you are so sure you are right.
You'll go into the live chat room and see other traders making pips and you want to know why it's not you - you'll ask a million questions, some of which are so dumb that looking back you feel a bit silly. You'll then reach the point where you think all the ones who are calling pips after pips are liars - they cant be making that amount cos you've studied and you don't make that, you know as much as they do and they must be lying. but they're in there day after day and their account just grows whilst yours falls.
You will be like a teenager - the traders that make money will freely give you advice but you're stubborn and think that you know best - you take no notice and over leverage your account even though everyone says you are mad to - but you know better.
you'll consider following the calls that others make but even then it wont work so you try paying for signals from someone else - they don't work for you either.
This phase can last ages and ages - in fact in reality it can last well over a year - My own period lasted about 18 months.
Eventually you do begin to come out of this phase. You've probably committed more time and money than you ever thought you would, lost 2 or 3 loaded accounts and all but given up maybe 3 or 4 times.
Then comes level 3
Level #1. Unconscious Incompetent
This is the first step you take when starting to look into trading. you know that its a good way of making money cos you've heard so many things about it and heard of so many millionaires.Unfortunately, just like when you first desire to drive a car you think it will be easy - after all, how hard can it be?? - price either moves up or down - what's the big secret to that then - lets get cracking!
unfortunately, just as when you first take your place in front of a steering wheel you find very quickly that you haven't got the first clue about what you're trying to do. you take lots of trades and lots of risks. when you enter a trade it turns against you so you reverse and it turns again .. and again, and again.
you try to turn around your losses by doubling up every time you trade - sometimes you'll get away with it but more often than not you will come away scathed and bruised
Well this is stage one - you are totally oblivious to your incompetence at trading.Stage one can last for a week or two of trading but the market is usually swift and you move onto level #2.
According to this article, there is a classification for forex traders based at their achievement. Start from today, I will post the level of classification. Hope this is useful to consider your trading level.
The trading level of a forex trader
- Level #1 : Unconscious Incompetence
- Level #2 : Conscious Competence
- Level #3: The Eureka Moment
- Level #4: Conscious Competence
- Level #5: Unconscious Competence
Read them all at my next post!
In principal, trading forex is same as any trading form in this world. The basic strategy is buy at low and sell at high. But why this simple strategy is so hard to do? Because nobody can control the market. High and low are decided by conclusion and psychology level from all traders in this world. The basic economic law about trading is there must be a balance between supply and demand. When a resistant level of price is broken, the balance is changing.
Why we must think like a real trader? Because trading forex is same as like any trading form in this world. In real life, real trader acts in same way. If an item is too expensive for him, he would not buy it. He will wait until he feels the price is acceptable and profitable. And of course, when an item is too cheap, he would not sell his item because he will lose his money. This very basic formula is also very basic trading psychology for man.
Many beginner traders act just like they are professional. They think that they could control the market. So, when the price is rather high they will follow with all their money, thinking that price will go higher and higher. The wise action is analyzing the movement. Remember the basic economic law. When price is high, the demand will reduce and the supply will over. But when it is low, demand will rise and supply will reduce.
There are many fundamental news that are watched by traders. Among of them, I select several news that have big influence in price movements. I figured that not all of "good news" is good and vice versa. Let's discuss about them one by one sorted from the most important news (remember, the qualification for most important is based at my experience).
- Interest Rate Statement. The mother of all fundamental news is this one. If a central bank release higher rate, bigger possibility their currency will increase and vice versa.
- Inflation report (PPI,CPI). Many traders follow the perspective of forex sites but for this one, I choose to follow mine. Usually in many forex sites, if inflation report of a country is going up, they will say that is a bad news. But in my understanding, if inflation is going up then Central Bank has to raise the interest to cooling down the economic growth. So, if inflation is going up then currency will be follow in the same way.
- Non Farm Payroll (NFP). Since US$ is still the mother of any currencies in this world (at least until I write this article LOL), then we must accept that any reports about their economic will have a big influence in forex market. This news has a big impact for a short moment.
- Retail Sales. This report indicates the actual economic but be aware of season. In winter, usually it doesn't show right situation. If retail sales is up then the national economic is in good shape. So, inflation will follow and the interest rate, too.
Until now, I still don't find a holy grail forex system that can win 100%. Maybe someday, one of us will find that. But until that day, do we stop trading forex? Personally, I won't wait for the holy grail. No one is perfect just like forex system. So, what can we do to survive at this forex jungle?
The answer is simple but hard to do, minimize your loss and maximize your profit. If you want to survive, your profit must be greater than your loss.
Ok, let's talk about maximize the profit. There are several ways that I would mention it below. Here they are :
- Divide your position into several trades. The goal of this system is gaining higher level TP (Take Profit) and keeping the profit step by step.
- Use Trailing Stop after position is profit. This could be a good way to eliminate the fear factor and saving a lot of time beside doing by manual.
- Use some meta scripts to handle your position easier. There are some scripts for MetaTrader Platform that can help to handle position much easier. For example, there is a script for closing all profitable position. They can help a lot for trader who trade in a short time or scalping.
- Use different strategy in different market time. As we know, there are some market in a whole day. Trading day begin from Asian Market, European, and US. Those market has a different pattern as we know sideways and trending. In common case, at Asian market price usually is in sideways moment then stop at European to move as in trending and continue in US market. Find the suitable strategy for each of market time.
These are 10 tips that I think must do to become successful forex trader :
- Learn from your losing
- Find what factors that made you lost
- Do not repeat the loss factors
- Change your loss factors into winning factors
- Make a plan for your trading
- Do your plan and stick with them
- Always use Money Management
- Use strategy to maximize profits
- Take your loss like your profit
- Learn about market psychology
That is a question for me after doing trading forex for almost a year. I have been looking for the answer for a few moment until I found the answer for myself. Trading forex can be simple or complicated depends on our knowledge about forex itself. Trading forex is same as many kinds of trading terms in this world, what makes it different are the items that being trade and the influence factors.
For beginner, there are a lot of things that should to be learn to become successful in trading forex. I think the word "learn" is making it looks complicated (I am a lazy student, LOL). But there are almost no man in this world that become successful without learning. From we born, we have been learning a lot to become like today. Stand up, walking, running, eating, writing, typing, bla.. bla.. bla.. (that I should mention all?) are things that we have learnt until today. So, if you want to become a successful trader, you should LEARN it. There are a lot of site that gives something to learn, one of them is www.babypips.com. They have good and structural lessons to learn forex for beginner or even for pro trader.
If you already pass the phase of learning, than you should practice how to trade in your platform as often as possible. Remember, practice makes perfect. After doing many trade, you will be familiar with the platform and start to have a habbit. Yes, the good thing is habbit makes you love each other with forex itself (if you hate it then you should not continue to trade forex ha ha ha) . The bad thing is usually you already loss many times until you find a good habbit (where is my money LOL).
After learn and have a good habbit, then you will find out that trading forex is simple. You weak up every morning, read the economic news, watch and do some exercise in your chart, take a position, and then go for your daily activities. Then profit will follow you everyday.
